Stocks will try to maintain their bullish momentum next week after a strong start to November, with Treasury yields falling from their highs and investors betting that the Federal Reserve may well be done raising interest rates. Investors started the month with considerable gains. All three major averages rose in November, with the Dow Jones Industrial Average on Friday capping its best week since October 2022. The S&P 500 and Nasdaq Composite posted their best week since November 2022. Those gains came after the Fed Federal to keep rates unchanged. for the second consecutive meeting, and as bond yields fell. The 10-year Treasury yield fell to around 4.57% after topping the 5% level at various points last month. Yields and prices move in opposite directions. One basis point is equivalent to 0.01%. Wall Street will try to maintain the rally in a week that will be relatively light on economic data and earnings results, as the corporate reporting season draws to a close and seasonal tailwinds intensify as we enter the holiday season. . “We have a paved road ahead with no potential roadblocks from economic reports that could disrupt our progress,” said Sam Stovall, chief investment strategist at CFRA. Historically speaking, November is the best-performing month for the S&P 500, according to the Stock Traders’ Almanac, and many expect a broader rally in stocks after three straight months of declines. “I just feel like this little correction has run its course,” Stovall said. “And hopefully we’ll now break even again, and then some, from this overall decline.” Economic Data and Results Of course, investors will absorb some notable data next week. Consumer credit figures for September will be released on Tuesday and are expected to show an increase in individual debt as shoppers prepare for the holiday season. Economists surveyed by FactSet expect consumer installment credit in September to have increased by $7.5 billion, reversing a decline of $15.6 billion in August. Investors will also monitor November’s preliminary reading of the Michigan Sentiment Survey for any signs of weakness in consumer confidence. The report, due out next Friday, is expected to rise slightly to 64.0, from 63.8 the previous month, according to FactSet. Earnings season will come to a close with most of the corporate updates behind investors. Of the roughly 400 S&P 500 companies that have reported, more than 80% have exceeded expectations, according to FactSet. In fact, earnings in the broader index would have grown 3.7% in the third quarter, according to a FactSet estimate that takes into account both the reports that have come in and the expectations of those that have not. “I think we’re coming out of this earnings recession,” Stovall said. “While we don’t foresee an economic recession, this in some sense increases the likelihood that we end up with a simple soft landing.” Investors will take note of Disney’s earnings to see if the media and entertainment company is solving its problems, after the share price fell by more than half from its 2021 highs. Homebuilder DR Horton may give an idea of ​​how much of a slowdown may have occurred in the housing market thanks to higher mortgage rates. Treasury Auctions, Fed Speakers on Agenda One notable development is the Treasury Department’s plans to auction $112 billion in debt next week, while securing funding for government obligations, including rising servicing costs. Of the debt. The Treasury is seeking to repay $102.2 billion in bonds that mature on Nov. 15 and raise more than $9 billion in additional funds. “Bond yields are the main concern for investors and what drives bond yields is supply and demand,” Stovall said. “The hope is that there will be enough demand to meet supply without the yield rising again. So I think the Treasury auctions will be very important in maintaining investor optimism.” Investors will also pay attention to Fed Chair Jerome Powell after this week’s monetary policy meeting. The Federal Reserve leader is scheduled to speak twice next week and is likely to reiterate statements made at a news conference after the November policy meeting that he will remain vigilant about inflation and that the central bank will continue relying on immediate price data. On Thursday he will speak before the International Monetary Fund. “What I would really be looking for and listening to any Fed official is simply to confirm that they are beginning to shift their language toward one that will be a much more balanced approach to monetary policy, as opposed to the laser-“The approach that they have taken in the fight against inflation over the past year,” said Dave Sekera, chief U.S. market strategist at Morningstar Research Services. Other Fed speakers on the agenda include Fed Governor Cook on Monday from Duke University , and New York Federal Reserve President and CEO John Williams in Washington, D.C. on Wednesday. Sekera said he is looking for more confirmation that a slowing economy will give the central bank room to begin cutting rates in the first half of next year. Until then, the strategist said investors should take time next week to position their portfolios for what lies ahead, and he said now is an especially good time to lock in higher rates in the market. of bonds before any policy easing. “After the rush of gains the last two weeks have had, I think next week will be a good time for investors to take a breather and catch up on anything else they may have missed in the last two weeks. weeks,” Sekera said. Advance weekly calendar All times ET. Monday, November 6, 2023 11 a.m. Federal Reserve Governor Cook speaks on financial stability at Duke University, Durham, North Carolina Tuesday, November 7, 2023 8:30 a.m. Trade Balance (September) 12 p.m. President and CEO of the New York Federal Reserve, John Williams moderates a discussion at a “A Conversation with Erika H. James” event hosted by the Economic Club of New York, Harvard Club 3 pm Consumer Credit (September) Earnings: Western Petroleum, eBay, DR Horton, Air Products & Chemicals Wednesday, November. September 8, 2023 10 am Wholesale Inventories End (September) 1:40 pm New York Federal Reserve President and CEO John Williams delivers keynote address at an event “Research and Statistics at 100: A Look at the Past, Present and Future”, Washington, DC Earnings: Walt Disney Company, MGM Resorts International, Ralph Lauren, Warner Bros. Discovery Thursday, November 9, 2023 8:30 am Continued Unemployment Claims (10/28) 8 :30 am Initial Applications (04/11) Earnings: Wynn Resorts Friday, November 10, 2023 10 am Michigan Preliminary Sentiment (November) 2 pm Treasury Budget (October)
